State ex rel. Schmitt v. Schier Co.

• Decision Date: 28 January 2020
• Docket Number: No. SD 35829,SD 35829
• Citation: 594 S.W.3d 245
• Parties: STATE of Missouri, EX REL. Attorney General Eric SCHMITT, Plaintiff-Respondent, v. SCHIER COMPANY, INC., and Gary Allen Schier, Defendants-Appellants.
• Court: Missouri Court of Appeals

594 S.W.3d 245

STATE of Missouri, EX REL. Attorney General Eric SCHMITT, Plaintiff-Respondent,

v.SCHIER COMPANY, INC., and Gary Allen Schier, Defendants-Appellants.

No. SD 35829

Missouri Court of Appeals, Southern District, Division Two.

Filed: January 28, 2020

HEATH HARDMAN, Mountain Grove, Mo, for Appellants.

JOHN W. GRANTHAM, Jefferson City, Mo, for Respondent.

DON E. BURRELL, J.

Schier Company, Inc. ("Schier Co.") and Gary Allen Schier ("Schier") (collectively, "Defendants") appeal the trial court’s judgment in favor of State of Missouri, ex rel. Attorney General Joshua Hawley,¹ ("A.G.") for violations of the Missouri Merchandising Practices Act ("MMPA"). Defendants claim the trial court erred in entering judgment in favor of A.G. under the MMPA and awarding "rescission"² because: (1) A.G. failed to meet its burden of proof on the element of "misrepresentation or concealment, suppression or omission of a material fact"; (2) A.G. failed to meet its burden of proof on the element of "ascertainable loss"; (3) rescission was not pled in the petition or requested any time prior to trial; (4) there was no "evidence of probative force showing that [Schier] had actual or constructive knowledge of actionable wrong and participated therein" to hold Schier individually liable; and (5) "application of the MMPA is unfair, unjust, and outside the scope intended by the legislature[.]"

Finding the last of these claims outside of our purview and no merit in the others, we affirm.

Standard of Review

We presume the judgment correct, and the appellant bears the burden of demonstrating reversible error. Houston v. Crider , 317 S.W.3d 178, 186 (Mo. App. S.D. 2010). Therefore, we must affirm the judgment unless the appellant demonstrates that there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron , 536 S.W.2d 30, 32 (Mo banc. 1976) ; Rule 84.13(d).

"Substantial evidence is evidence that, if believed, has some probative force on each fact that is necessary to sustain the [trial] court’s judgment." Ivie v. Smith , 439 S.W.3d 189, 199 (Mo. banc 2014). "Evidence has probative force if it has any tendency to make a material fact more or less likely." Id. at 199-200. To determine if the trial court’s judgment is supported by substantial evidence, we "view the evidence and the reasonable inferences drawn from the evidence in the light most favorable to the judgment, disregard all evidence and inferences contrary to the judgment, and defer to the trial court’s superior position to make credibility determinations." Houston , 317 S.W.3d at 186. All fact issues upon which no specific finding is made must be considered to have been made in accordance with the result reached. Ivie , 439 S.W.3d at 200 ; Rule 73.01(c).

A judgment is against the weight of the evidence only if the trial court could not have reasonably found, from the record at trial, the existence of a fact necessary to sustain the judgment. Id. at 206. This challenge differs from a challenge to the sufficiency of the evidence. It is a test of how much persuasive value evidence has—not simply whether sufficient evidence exists that tends to prove a necessary fact. Id. Like a substantial-evidence challenge, however, we defer to the trial court’s factual findings when those alleged facts are contested. Id. at 200, 206. The against-the-weight standard serves only as a check on a trial court’s potential abuse of power in weighing the evidence. Id. at 206.

The Evidence

Dairymen’s Best Creamery Cooperative, LLC ("Dairymen’s Best") is a co-op of dairy farmers formed for the purpose of processing milk into marketable milk products.³ Dairymen’s Best hired David Cline ("Cline") to manage and supervise the construction of the dairy-processing plant. Cline’s responsibilities included ordering the dairy-processing equipment necessary to get the plant operational.

Schier Co. is a company that buys and sells used dairy-processing equipment to dairy operations. Schier Co. does not itself refurbish or manufacture dairy equipment or parts; it obtains all such equipment and parts from third parties. Schier is the founder, sole owner, and president of Schier Co. In his role as president, Schier is "responsible for everything that the company does[,]" including approving the contents of the company’s website.⁴ Schier Co.’s website states "[w]e inspect each one of our new and used, reconditioned pieces for the highest quality and efficiency to ensure that all our equipment is long-lasting and reliable." While the website guaranteed Schier Co.’s reconditioned equipment to be "free from defects[,]" it excluded equipment and pieces obtained from third-party vendors.

Cline, on behalf of Dairymen’s Best, began looking for dairy-processing equipment to order for the plant. He reviewed Schier Co.’s website and recommended to the board of Dairymen’s Best that the necessary processing equipment be ordered from Schier Co. Dairymen’s Best followed that recommendation and ordered a milk pasteurizer⁵ from Schier Co.

When the pasteurizer arrived, it appeared that all of its valuable parts had been removed. The parts that remained were not usable. When inspectors from the State Milk Board came to inspect the pasteurizer, it failed the inspection. When contacted after that failed inspection, Schier agreed to take the machine back and provide a $20,000 credit toward the purchase of a new machine with an upgraded capacity to 1,000 gallon per hour.

Schier told Cline that the second pasteurizer would be built from the frame of a used pasteurizer with new components that would make the machine "like new[.]" Schier personally spoke with Cline and promised that the second pasteurizer would be "PMO [Pasteurized Milk Ordinance] compliant."⁶ The written invoice for the second pasteurizer (the "HTST pasteurizer") stated it would be a "PMO legal 1,000-gallon-per-hour HTST pasteurizer system[.]"⁷

Dairymen’s Best ordered the HTST pasteurizer on January 5, 2015, and remitted the down payment on January 21, 2015.⁸ Dairymen’s Best paid the remaining balance on the HTST pasteurizer before delivery was made. Dairymen’s Best paid for all equipment it received from Schier Co. in full. The total amount paid by Dairymen’s Best for the HTST pasteurizer was $79,400.

After delivery, Dairymen’s Best discovered that the HTST pasteurizer had been refurbished in Mexico. Dairymen’s Best did not know that the equipment would be coming from Mexico, and it would not have purchased a piece of equipment that did not have nearby factory support. Defendants did not inspect the HTST pasteurizer prior to delivery.

Dairymen’s Best hired a local metal-working company to install the HTST pasteurizer. After installation, inspectors from the State Milk Board inspected the HTST pasteurizer. The inspectors observed several defects in the equipment that rendered it PMO non-compliant. Don Falls, an inspector and state rating officer for the State Milk Board, determined that the HTST would not pass under PMO regulations because: the thermometers were too short to reach the milk flow; there was an improper slope in a holding tube along with an improperly oriented concentric reducer; there was a weld that was too rough; an improper vacuum-breaker was installed; the programmable logic controller ("PLC") was not pre-approved; and the balance-tank slope was incorrect. The HTST pasteurizer would not power-up unless factory technicians attached external computers to operate it. Even then, the equipment would not send the liquid through the entire process. There were also problems with the flow-diversion valves.⁹ The homogenizer

was not the correct size to work with the HTST pasteurizer because the rates of gallons per hour did not match. Because the inspectors were unable to determine who had manufactured the flow-diversion valves installed on the HTST pasteurizer, they were unable to certify the machine as PMO-compliant.

Dairymen’s Best would not have agreed to purchase a PMO non-compliant pasteurizer.¹⁰

In addition to the equipment’s obvious defects, Schier Co. failed to provide information about the programmable logic controller ("PLC") -- the software that governs certain functions of the HTST pasteurizer.¹¹ Without that information, inspectors cannot determine if the software will perform as required.

Several of the tests the inspectors needed to run could only be done with the machine powered-up. And, as previously noted, the equipment would not turn on until a factory technician overrode the installed controls with an attached laptop computer. Two technicians from Mexico came to work on the machine, but neither was able to get the HTST pasteurizer to operate. When the technicians turned the machine on, it would not maintain a temperature necessary for the machine to make milk flow in a forward direction so that it could be pasteurized.

Dairymen’s Best documented a list of defects and provided it to Schier Co. in an email indicating that the HTST pasteurizer had failed inspection. Schier received the email and reviewed it, but he denied having any knowledge that inspectors said there were specific defects that prevented them from certifying the equipment as PMO-compliant.

Dairymen’s Best obtained an estimate for the repairs required to make the equipment operable and PMO-compliant, and it requested that Schier Co. pay for the modifications. Defendants refused. Cline also requested that Schier Co. refund the money that Dairymen’s Best paid for the non-compliant HTST pasteurizer.

A.G. filed a petition against Defendants alleging violations of the MMPA that claimed Defendants had engaged in unfair or deceptive trade practices by representing that the HTST pasteurizer was PMO-compliant when, in fact, it was not (Count 1), that Defendants concealed, suppressed, or omitted the material fact that the equipment was not PMO-compliant (Count 2), and that Defendants misrepresented that all...